Cost components in Manufacturing

Cost components are also used for the following purposes:

• To compare estimated and actual production order costs.
• To express production variances.

• Operation Costs
• Material Costs
• Surcharge
• WIP Transfer Costs
• General Costs
• Not Applicable

In the cost component structure, you determine how a price is broken down. You can choose to break down the costs for every cost component in LN. You can also aggregate the costs on the three cost components defined in the Items - Costing (ticpr0107m000) session. In other words, in the cost component structure, you can break down the price to the level of detail you want: from completely aggregated until detailed in a greater or less degree.

• Setting up a cost component structure: aggregated costs

  In the Items - Costing (ticpr0107m000) session you must define three aggregated cost components for an item. The aggregated cost components are associated with the following costs:

  • Material costs
  • Operation costs
  • Surcharge costs

  If you do not enter a chart in the Cost Component Chart field in the Items - Costing (ticpr0107m000) session, or for Assembly Control in the Assembly Line Costing Data (ticpr0115m000) session, all costs are broken down on the aggregated cost components. This means in Shop Floor Control that if you report an order or a quantity as complete, and the items are received in the warehouse, the following happens:

  • All cost linked to cost components of the Material Costs type are booked on the aggregated cost component for material costs.
  • All cost linked to cost components of the Operation Costs type are booked on the aggregated cost component for operation costs.
  • All cost linked to cost components of the Surcharge on Material Costs type or the Surcharge on Operation Costs type are booked on the aggregated cost component for surcharge costs.
• Setting up a cost component structure: detailed costs

  If you want to break down your costs in a detailed way, you must, apart from the aggregated cost components, define detailed cost components in the Chart Details (ticpr0110m000) session. The detailed cost components are linked to a chart that is defined in the Cost Component Charts (ticpr0109m000) session. If you enter the chart with associated detailed cost components in the Cost Component Chart field in the Items - Costing (ticpr0107m000) session, or for Assembly Control in the Assembly Line Costing Data (ticpr0115m000) session, all costs are broken down according to the cost component structure (chart details) that you defined for the chart. This means in Shop Floor Control that if you report an order or a quantity as complete, and the items are received in the warehouse, the following happens:

  • Costs are booked to the matching cost component in the cost component structure.
  • If costs were linked to a cost component in LN that does not exist in the end item's cost component structure, the costs are collected in the end item's aggregated cost component.
• Booking costs on cost components

  During production of a manufactured item, all costs are booked on the cost component to which the costs are linked. These cost components can differ from the cost components in the end item's cost component structure.

  • Operation costs are booked on the cost component as defined in the Operation Rates (ticpr1150m000) session.
  • Material costs are booked on the materials' cost components. You can view the cost components in the Item Inventory - Cost Details (whwmd2517m000) session.
  • Surcharges are booked on the cost component as defined in the Item Surcharges (ticpr1110m000) session.

  After production, if you report an order as complete and the items are received in the warehouse, the costs are booked on the cost components as defined in the end item's cost component structure. If the Moment Completion Posting field in the Production Orders (tisfc0501m000) session is Quantity Completed, the costs are booked as soon as a quantity of the production order is reported completed.